History Repeating: New Principal Funds White Paper Looks Back to Help Move Investors Forward
Paper aids financial professionals in client conversations on rebuilding.
October 21, 2009 (Des Moines, IA) - It's no secret that the stock market decline of 2008 shook the confidence of many investors.
A new white paper from Principal Funds, Working to Rebuild Assets: Keys to Managing Risk and Volatility, provides suggestions for financial professionals to help investors visualize their rebuilding process based on the experience of investors in previous bear market recoveries. It also offers approaches to demonstrate various concepts of investing.
"Financial professionals have an enormous opportunity to help clients emerge from a state of fear and panic to one of perspective and rebuilding," said Tim Hill, Principal Funds national sales director. "The historical data within the paper seeks to illustrate the importance that asset allocation and diversification play in managing a successful portfolio."
According to the paper, the speed of recovery to previous account balances depends on the interaction of the following factors:
- Account size: the investor's total mutual fund balances at the stock market's high point (roughly Jan. 1, 2008)
- New money: the existence and amount of new money being invested and the need to put money to work rather than allowing it to pile up on the sidelines
- Asset allocation: the asset allocation and future investment returns of the investor's mutual fund investments
The paper includes simple charts on how historic market declines have been followed by periods of sustained growth, the math of dollar-cost averaging and the costly mistake of buying high and selling low.
"It's important to note that the message goes beyond rebuilding. It's also about perspective," Hill said. "There is a natural flow to investing; markets experience ups and downs. The point is that financial professionals can help investors take proactive steps to achieve both their short- and long-term financial goals."
The paper, available for download at https://www.principalfunds.com/investor/promo/workingtorebuild/, is one component of Principal Funds' Ready, Set, Rebuild program that gives financial professionals the tools and information to:
- Uncover investors' financial needs in a recovering economy
- Re-evaluate investors' financial situations
- Reassess investors' risk tolerances
- Help investors get back on track toward financial goals
Financial professionals can contact Principal Funds at 800.787.1621 to request their copy of the Ready, Set, Rebuild kit.
Principal Funds is a leading provider of mutual funds, with more than $47.1 billion in assets under management. Principal Funds brings expertise in global investment management, asset allocation and retirement leadership to financial professionals and investors. Including its target-risk and target-date offerings, Principal Funds is the fifth-largest manager of lifecycle funds in the industry. The companies that make up Principal Funds are members of the Principal Financial Group®. For more information, visit www.principalfunds.com.
About the Principal Financial Group
The Principal Financial Group® (The Principal ®) is a leader in offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and investment services, life and health insurance, and banking through its diverse family of financial services companies. A member of the Fortune 500, the Principal Financial Group has $257.7 billion in assets under management and serves some 18.8 million customers worldwide from offices in Asia, Australia, Europe, Latin America and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the ticker symbol PFG. For more information, visit www.principal.com.
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Principal Funds, Inc. is distributed by Principal Funds Distributor, Inc., member of the Principal Financial Group®. Principal Funds Distributor, Principal Shareholder Services, Principal Management Corporation and its affiliates, and Principal Funds, Inc. are collectively referred to as Principal Funds.
- As of June 30, 2009. Includes all share classes of the Principal Funds, Inc and Principal Variable Contracts Fund, Inc
- FRC Mutual Fund Lifecycle Report 2Q09.
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- As of June 30, 2009.